Yangzijiang Shipbuilding
Yangzijiang Shipbuilding CNY1 billion in Q1, Margins expected to remain high
Monday, 24 October 2011
BUY
(Bloomberg: YZJ SP)
(Maintain)
Thursday, 26 April 2012
Rationale for report: Results Update
Financials YE 31 Dec, CNY(b)
2011A
2012F
2013F
2014F
15.7
19.2
22.6
25.9
Gross Profit
4.9
5.4
5.7
6.0
Pre-Tax Profit
5.0
5.2
5.5
5.7
Revenue
4.0
4.2
4.4
4.6
EPS (S cents)
19.9
21.1
22.2
23.0
DPS (S cents)
5.5
6.0
6.5
7.0
PER (x)
6.0
5.7
5.4
5.2
Div Yield (%)
4.6
5.0
5.4
5.8
2011A
2012F
2013F
2014F
Gross Margin (%)
31.0
28.2
25.4
23.0
Net Margin (%)
25.3
21.9
19.6
17.7
ROE (%)
29.0
25.0
22.1
19.6
ROIC (%)
27.9
25.7
27.0
27.9
8.3
cash
cash
cash
68.8
84.4
100.7
117.1
PATMI
Key Operating Statistics
Net Gearing (%) NAV/Share (S cents)
Market Cap (SGD m) Major Shareholders
4,603
Core shipyard revenues up 9.6% to CNY3.3b from CNY 3.0b one year ago. As more containerships are built this year, we expect an acceleration in revenue recognized.
Shipbuilding margin maintained extremely high at 26.4%, trumping consensus forecasts of sharp margin drops. Half the order book of containerships is still high-margin, giving strong support to 2012F/13F profitability.
Margin guidance remains high: Management has guided that shipbuilding margins for 2012 and 2013 should remain close to 2011’s high of 26%. We raise our FY12F/13F margins from 23%/21% to 24%/22%, staying conservative.
“Good chance” of 18 Seaspan options being exercised: Mgmt is very optimistic on securing the US1.8b Seaspan orders. According to mgmt., Seaspan has secured financing, and is now waiting on the customer to finalize charters on the vessels. We expect these orders to come through in 2H2012, making 72% of YZJ’s expected order wins this year, on top of the US206m orders secured this quarter.
We see demand for YZJ’s new high-efficiency vessels: With fuel prices high and expected to go higher, ship operators need to replace old fuel-quaffing vessels with newer ones with low fuel consumption, larger capacities (for economies of scale), and lower emissions. YZJ is targeting Japanese/ Korean quality while offering Chinese prices— we believe shipowners will find this combination irresistible. We expect new containership orders in 2H2012.
We favour the strongest player in weak industries: The overall shipbuilding industry is still finding its trough, but pressures are easing—mgmt. reports falling equipment prices which are a significant cost component, and new environmental standards to be implemented by 30 Jun 2012 will force as much as 15% of Chinese capacity (which are already loss-making) out of the market. In this climate, we favour YZJ as the most profitable shipbuilder in China with an extremely strong balance sheet.
Deep value at 5.7x P/E, raise FV to $1.680: With margins expected to remain high and the macroeconomic outlook being stronger than in Sep 2011 when we initiated coverage, we raise our P/E peg from 7.5x to 8x, resulting in a higher FV of $1.680. YZJ is an extremely strong company, and we love strong companies in weak industries/markets. Such situations offer the highest probabilities for stock prices to double over a 3-year horizon. Buy.
Wang Dong (13.3%) Free Float 52 week lo / hi
41% $0.770 / $1.185
12-Month YZJ SP vs. FSSTI
Source: Bloomberg
Lee Yue Jer [email protected] +65 6236 2557
(Previous : $1.600)
PATMI of CNY1.02b in line with our forecast, 13% ahead of consensus: YZJ’s 1Q bottom line was extremely strong, growing 7% YoY. Q1 is typically the slowest quarter of the year and YZJ has already met 24% of our full-year estimate.
3,836 Ren Yuanlin (27.8%)
FAIR VALUE: S1.680
Stock Data Issued Shares (m)
LAST CLOSE: S$1.200
Please see important disclosures at the end of this publication
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
ADDITIONAL NOTES Profits and dividends to rise, now yielding 5%: We see YZJ’s profits and dividends rising from 2012F to 2014F. At today’s price, YZJ is yielding 5% on our forecast 6c dividend. Our optimism on YZJ’s earning power stems from its high-margin order book and the fact that the strongest yards get most of the new orders in a weak market. Strong bottom line performance
5,000 4,000 3,000 2,000 1,000 0 2004
05
06
2007
08
09
10
11
12F
13F
14F
Sources: Company, AmFraser Research
History of growing dividends
25
35% 30%
20
25% 15
20%
10
15%
10% 5
5%
0
0% 2007
08
09
Earnings per share (LHS: S cents)
10
11
12F
Dividends per share (LHS: S cents)
13F
14F Payout ratio (RHS)
Sources: Company, AmFraser Research
Good order book, shipbuilding slump can’t last forever: YZJ’s US$4.5b order book covers 2012 fully and over half of 2013. We are optimistic that new orders, for delivery in 2014+, will be secured in the next twelve months, given that the global order book for delivery of bulkers and containerships basically dries up in 2014. There is always a constant demand for fleet renewals, especially against the unrelenting tyranny of high oil prices. Vessel Qty
US$’ billion 8.0
180 160
6.9
7.0
140 120
5.6
6.0
5.3
77
4.7
4.5
5.0
100 73 80
4.0
93 52
50
60 40
3.0 2.0
78 54
20
38
48
46
31 Dec 2011
31-Mar-12
0
1.0 -
24 Feb 2009
31 Dec 2009
Containerships
31 Dec 2010 Bulk Carriers
Outstanding Value (US$'bln)
Source: Company
AmFraser Securities Pte Ltd
Page 2
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
Contrary to popular belief, shipbreaking is not an “easy” business: Mgmt. shared today that there are only 23 shipbreaking yards in China, and that YZJ already ranks No. 3 with its 300,000-ton capacity. There were originally 100+ such yards in China, but the slew of ever-more-stringent environmental regulations, the high paid-up-capital required to purchase ships, and large space requirements to store scrap metal make this a high-barrier-to-entry business. Further, the Chinese government is not approving any more shipbreaking licenses. YZJ is thus well-placed to ride a shipbreaking boom with supply-side constraints. Targeting CNY300m of cost reductions: YZJ has the tightest cost-control culture amongst Chinese yards. Last year, it achieved CNY300m of cost reductions, and it is targeting the same this year. Incentives to do so are high—mgmt. rewards employees with 5% - 7% of cost reduction initiatives, which can work out to a substantial percentage of their annual wages. These cost control measures have enabled YZJ to achieve very high margins (of course, the bulk of the increase is attributable to the held-to-maturity assets, but this does not detract from the main point). The cost savings of CNY300m translates into 7% of our FY12F net profit estimate—by no means a trivial amount. 6,000
RMB’ mln
45% 5,386
5,136
5,000 34.3%
4,000 3,000
39.3%
40%
37.5%
35%
3,819 3,650 29.6%
26.8% 24.7%
25.4% 2,693 2,564
32.7%
30%
28.2%
25%
25.8% 23.5% 1,727 1,816
2,000
24.1% 1,450 1,384
1,000
996 1,034
20% 15%
-
10% FY2007
FY2008
EBIT (RMB'mln)
FY2009
FY2010
EBITDA (RMB'mln)
FY2011
EBIT Margin
1Q2012 EBITDA Margin Source: Company
Held-to-maturity assets now subject to even greater safeguards: Following suggestions by the Independent Directors, YZJ has elevated a senior risk manager to head the 10-member investment committee. This risk manager has veto power over investment recommendations, and the lower quantum of investment funds this quarter is a result of the higher standards applied. We expect YZJ to maintain CNY10b of HTM assets this year. With a more conducive bank-lending environment emerging in China, and capex demands in following years, we see this HTM-asset balance gradually falling to CNY7.9b in 2014. Why so cheap? YZJ is trading at only 5.7x forward P/E, and the current price is a whisker away from our forecast 2014F book value of $1.17. YZJ has always been an asset-light-earnings-heavy company—these valuations are extremely low, and a long-term investor should be able to double his/her money in the time it takes for the market to rerate YZJ to a P/E of 12x and its historical average of 3x P/B. If this takes 3 years, the annualized return would be 25%+.
AmFraser Securities Pte Ltd
Page 3
Yangzijiang Shipbuilding (Holdings) Ltd
YE 31 Dec INCOME STATEMENTS CNY'000 Shipbuilding Shipbreaking Investment Micro Finance Rigbuilding Revenue Cost of Sales Gross Profit Other Operating Income Administrative Expenses Other Gains/(Losses) Profit from Operations Goodwill writeoff Finance Costs Profit before Tax Income Tax Non-controlling interests PATMI
Thursday, 26 April 2012
2010A 12,363,404 540,151 19,253 12,922,808 (10,014,936) 2,907,872 969,533 (221,351) 3,656,054 (25,103) 3,629,407 (677,151) 3,084 2,955,340
2011A 14,608,898 916,878 180,053 15,705,828 (10,843,133) 4,862,695 150,067 (394,544) 452,044 5,070,262 (124,668) 4,998,481 (988,089) (33,793) 3,976,599
2012F 16,946,322 990,000 1,100,254 195,716 19,232,291 (13,817,795) 5,414,497 541,548 (468,041) 5,488,004 (255,528) 5,232,476 (994,170) (35,483) 4,202,823
2013F 19,318,807 1,650,000 990,228 293,574 315,000 22,567,609 (16,832,063) 5,735,546 595,703 (562,082) 5,769,167 (255,528) 5,513,639 (1,047,591) (37,257) 4,428,791
2014F 22,216,628 1,800,000 891,205 381,646 630,000 25,919,479 (19,967,214) 5,952,266 655,273 (653,323) 5,954,215 (255,528) 5,698,687 (1,082,751) (39,120) 4,576,817
EBITDA Free Cash Flow EPS (S cents) Book Value per Share (S cents)
3,816,158 3,497,174 15.36 50.51
5,346,915 (6,358,548) 19.94 68.84
5,890,984 2,493,431 21.09 84.43
6,252,147 1,868,185 22.23 100.66
6,517,195 3,911,205 22.97 117.13
BALANCE SHEETS CNY'000 Cash and cash equivalents Trade and other receivables Inventory Property, Plant, Equipment Other current assets Other longterm assets Total Assets
2010A 6,747,452 5,371,030 1,276,892 2,629,809 5,516,639 4,626,232 26,168,054
2011A 7,345,981 8,346,717 1,654,002 3,822,124 6,994,496 5,575,684 33,739,004
2012F 11,929,464 9,484,418 1,703,564 6,419,144 6,989,128 5,073,736 41,599,454
2013F 13,602,116 11,129,232 2,075,186 7,936,164 5,989,128 5,050,587 45,782,413
2014F 17,218,160 12,782,209 2,461,711 7,573,184 4,989,128 5,027,463 50,051,855
Trade Payables Borrowings: Current Borrowings: Non-Current Other Current Liabilities Other Longterm Liabilities Share Capital Other Equity Total Liabilities and Equity
3,627,812 906,450 320,309 10,806,777 428,229 6,262,406 3,816,071 26,168,054
3,499,872 6,044,001 2,446,828 7,515,114 516,533 6,242,037 7,474,619 33,739,004
4,353,552 7,319,675 3,722,502 8,813,114 567,038 6,242,037 10,581,536 41,599,454
5,303,253 7,319,675 3,722,502 8,813,114 567,038 6,242,037 13,814,794 45,782,413
6,291,040 7,319,675 3,722,502 8,813,114 567,038 6,242,037 17,096,450 50,051,856
AmFraser Securities Pte Ltd
Page 4
Yangzijiang Shipbuilding (Holdings) Ltd
CASHFLOW STATEMENTS Profit before tax Depreciation Change in working capital Other cash from operations (Interest paid) (Income tax paid) Net Cash from Operations (Purchase)/Disposal of PPE Other CFI (Dividends paid) Debt raised / (repaid) Equity Raised / (Bought Back) Other Cash from Financing
Thursday, 26 April 2012
2010A 3,629,407 161,648 1,015,311 (718,473) (20,910) (410,965) 3,656,018
2011A 4,998,481 223,766 (10,684,998) 580,537 (137,631) (853,530) (5,873,375)
2012F 5,232,476 402,980 964,417 143,256 (255,528) (994,170) 5,493,431
2013F 5,513,639 482,980 (1,066,735) 241,421 (255,528) (1,047,591) 3,868,185
2014F 5,698,687 562,980 (1,051,715) 239,532 (255,528) (1,082,751) 4,111,205
(158,844) (3,686,341)
(485,173) (837,105)
(3,000,000) 36,007
(2,000,000) 1,000,000
(200,000) 1,000,000
(618,238) 108,682 1,283,006 151,800
(909,992) 6,442,852 (20,369) 292,489
(1,095,906) 1,275,674 -
(1,195,533) -
(1,295,161) -
Beginning Cash 3,806,955 4,543,038 3,152,365 5,861,571 7,534,223 Foreign Exchange Effect 0 End Cash 4,543,038 3,152,365 5,861,571 7,534,223 11,150,267 *Ending cash differs from balance sheet cash due to fixed deposits, overdrafts, restricted balances and other items
KEY RATIOS Profitability (%) Gross Margin EBITDA Margin Net Margin ROE ROA ROIC
2010A
2011A
2012F
2013F
2014F
22.5 29.5 22.9 29.3 11.3 39.7
31.0 34.0 25.3 29.0 11.8 27.9
28.2 30.6 21.9 25.0 10.1 25.7
25.4 27.7 19.6 22.1 9.7 27.0
23.0 25.1 17.7 19.6 9.1 27.9
21.6 42.3 42.4 29.1
21.5 40.1 37.7 34.6
22.5 10.2 4.7 5.7
17.3 6.1 5.4 5.4
14.9 4.2 3.4 3.3
Financial Structure (%) Networth Ratio Debt/Equity Net Gearing
38.5 12.2 (54.8)
40.7 61.9 8.3
40.4 65.6 (5.3)
43.8 55.1 (12.8)
46.6 47.3 (26.5)
Operational Efficiency Days Sales in Receivables Days in Inventory Days in Payables Cash Conversion Cycle (days) Asset Turnover (x)
150.7 38.5 91.6 97.6 0.5
159.4 49.3 120.0 88.8 0.5
180.0 45.0 115.0 110.0 0.5
180.0 45.0 115.0 110.0 0.5
180.0 45.0 115.0 110.0 0.5
8.1 2.4 1.9 6.8 4.8
6.0 1.7 1.5 (3.8) 4.7
5.7 1.4 1.2 9.6 3.9
5.4 1.2 1.1 12.8 3.4
5.2 1.0 0.9 6.1 2.7
Growth (% Y-o-Y) Revenue EBITDA Pre-Tax Income Net Income
Market Valuation (x) Price / Earnings Price / Book Price / Sales Price / Free Cash Flow EV / EBITDA
AmFraser Securities Pte Ltd
Page 5
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
AmFraser Research recommendations are based on a Total Return rating system, defined as follows: BUY: >15% total return over the next 12 months HOLD: -15% to +15% total return over the next 12 months SELL:
Monday, 24 October 2011
BUY
(Bloomberg: YZJ SP)
(Maintain)
Thursday, 26 April 2012
Rationale for report: Results Update
Financials YE 31 Dec, CNY(b)
2011A
2012F
2013F
2014F
15.7
19.2
22.6
25.9
Gross Profit
4.9
5.4
5.7
6.0
Pre-Tax Profit
5.0
5.2
5.5
5.7
Revenue
4.0
4.2
4.4
4.6
EPS (S cents)
19.9
21.1
22.2
23.0
DPS (S cents)
5.5
6.0
6.5
7.0
PER (x)
6.0
5.7
5.4
5.2
Div Yield (%)
4.6
5.0
5.4
5.8
2011A
2012F
2013F
2014F
Gross Margin (%)
31.0
28.2
25.4
23.0
Net Margin (%)
25.3
21.9
19.6
17.7
ROE (%)
29.0
25.0
22.1
19.6
ROIC (%)
27.9
25.7
27.0
27.9
8.3
cash
cash
cash
68.8
84.4
100.7
117.1
PATMI
Key Operating Statistics
Net Gearing (%) NAV/Share (S cents)
Market Cap (SGD m) Major Shareholders
4,603
Core shipyard revenues up 9.6% to CNY3.3b from CNY 3.0b one year ago. As more containerships are built this year, we expect an acceleration in revenue recognized.
Shipbuilding margin maintained extremely high at 26.4%, trumping consensus forecasts of sharp margin drops. Half the order book of containerships is still high-margin, giving strong support to 2012F/13F profitability.
Margin guidance remains high: Management has guided that shipbuilding margins for 2012 and 2013 should remain close to 2011’s high of 26%. We raise our FY12F/13F margins from 23%/21% to 24%/22%, staying conservative.
“Good chance” of 18 Seaspan options being exercised: Mgmt is very optimistic on securing the US1.8b Seaspan orders. According to mgmt., Seaspan has secured financing, and is now waiting on the customer to finalize charters on the vessels. We expect these orders to come through in 2H2012, making 72% of YZJ’s expected order wins this year, on top of the US206m orders secured this quarter.
We see demand for YZJ’s new high-efficiency vessels: With fuel prices high and expected to go higher, ship operators need to replace old fuel-quaffing vessels with newer ones with low fuel consumption, larger capacities (for economies of scale), and lower emissions. YZJ is targeting Japanese/ Korean quality while offering Chinese prices— we believe shipowners will find this combination irresistible. We expect new containership orders in 2H2012.
We favour the strongest player in weak industries: The overall shipbuilding industry is still finding its trough, but pressures are easing—mgmt. reports falling equipment prices which are a significant cost component, and new environmental standards to be implemented by 30 Jun 2012 will force as much as 15% of Chinese capacity (which are already loss-making) out of the market. In this climate, we favour YZJ as the most profitable shipbuilder in China with an extremely strong balance sheet.
Deep value at 5.7x P/E, raise FV to $1.680: With margins expected to remain high and the macroeconomic outlook being stronger than in Sep 2011 when we initiated coverage, we raise our P/E peg from 7.5x to 8x, resulting in a higher FV of $1.680. YZJ is an extremely strong company, and we love strong companies in weak industries/markets. Such situations offer the highest probabilities for stock prices to double over a 3-year horizon. Buy.
Wang Dong (13.3%) Free Float 52 week lo / hi
41% $0.770 / $1.185
12-Month YZJ SP vs. FSSTI
Source: Bloomberg
Lee Yue Jer [email protected] +65 6236 2557
(Previous : $1.600)
PATMI of CNY1.02b in line with our forecast, 13% ahead of consensus: YZJ’s 1Q bottom line was extremely strong, growing 7% YoY. Q1 is typically the slowest quarter of the year and YZJ has already met 24% of our full-year estimate.
3,836 Ren Yuanlin (27.8%)
FAIR VALUE: S1.680
Stock Data Issued Shares (m)
LAST CLOSE: S$1.200
Please see important disclosures at the end of this publication
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
ADDITIONAL NOTES Profits and dividends to rise, now yielding 5%: We see YZJ’s profits and dividends rising from 2012F to 2014F. At today’s price, YZJ is yielding 5% on our forecast 6c dividend. Our optimism on YZJ’s earning power stems from its high-margin order book and the fact that the strongest yards get most of the new orders in a weak market. Strong bottom line performance
5,000 4,000 3,000 2,000 1,000 0 2004
05
06
2007
08
09
10
11
12F
13F
14F
Sources: Company, AmFraser Research
History of growing dividends
25
35% 30%
20
25% 15
20%
10
15%
10% 5
5%
0
0% 2007
08
09
Earnings per share (LHS: S cents)
10
11
12F
Dividends per share (LHS: S cents)
13F
14F Payout ratio (RHS)
Sources: Company, AmFraser Research
Good order book, shipbuilding slump can’t last forever: YZJ’s US$4.5b order book covers 2012 fully and over half of 2013. We are optimistic that new orders, for delivery in 2014+, will be secured in the next twelve months, given that the global order book for delivery of bulkers and containerships basically dries up in 2014. There is always a constant demand for fleet renewals, especially against the unrelenting tyranny of high oil prices. Vessel Qty
US$’ billion 8.0
180 160
6.9
7.0
140 120
5.6
6.0
5.3
77
4.7
4.5
5.0
100 73 80
4.0
93 52
50
60 40
3.0 2.0
78 54
20
38
48
46
31 Dec 2011
31-Mar-12
0
1.0 -
24 Feb 2009
31 Dec 2009
Containerships
31 Dec 2010 Bulk Carriers
Outstanding Value (US$'bln)
Source: Company
AmFraser Securities Pte Ltd
Page 2
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
Contrary to popular belief, shipbreaking is not an “easy” business: Mgmt. shared today that there are only 23 shipbreaking yards in China, and that YZJ already ranks No. 3 with its 300,000-ton capacity. There were originally 100+ such yards in China, but the slew of ever-more-stringent environmental regulations, the high paid-up-capital required to purchase ships, and large space requirements to store scrap metal make this a high-barrier-to-entry business. Further, the Chinese government is not approving any more shipbreaking licenses. YZJ is thus well-placed to ride a shipbreaking boom with supply-side constraints. Targeting CNY300m of cost reductions: YZJ has the tightest cost-control culture amongst Chinese yards. Last year, it achieved CNY300m of cost reductions, and it is targeting the same this year. Incentives to do so are high—mgmt. rewards employees with 5% - 7% of cost reduction initiatives, which can work out to a substantial percentage of their annual wages. These cost control measures have enabled YZJ to achieve very high margins (of course, the bulk of the increase is attributable to the held-to-maturity assets, but this does not detract from the main point). The cost savings of CNY300m translates into 7% of our FY12F net profit estimate—by no means a trivial amount. 6,000
RMB’ mln
45% 5,386
5,136
5,000 34.3%
4,000 3,000
39.3%
40%
37.5%
35%
3,819 3,650 29.6%
26.8% 24.7%
25.4% 2,693 2,564
32.7%
30%
28.2%
25%
25.8% 23.5% 1,727 1,816
2,000
24.1% 1,450 1,384
1,000
996 1,034
20% 15%
-
10% FY2007
FY2008
EBIT (RMB'mln)
FY2009
FY2010
EBITDA (RMB'mln)
FY2011
EBIT Margin
1Q2012 EBITDA Margin Source: Company
Held-to-maturity assets now subject to even greater safeguards: Following suggestions by the Independent Directors, YZJ has elevated a senior risk manager to head the 10-member investment committee. This risk manager has veto power over investment recommendations, and the lower quantum of investment funds this quarter is a result of the higher standards applied. We expect YZJ to maintain CNY10b of HTM assets this year. With a more conducive bank-lending environment emerging in China, and capex demands in following years, we see this HTM-asset balance gradually falling to CNY7.9b in 2014. Why so cheap? YZJ is trading at only 5.7x forward P/E, and the current price is a whisker away from our forecast 2014F book value of $1.17. YZJ has always been an asset-light-earnings-heavy company—these valuations are extremely low, and a long-term investor should be able to double his/her money in the time it takes for the market to rerate YZJ to a P/E of 12x and its historical average of 3x P/B. If this takes 3 years, the annualized return would be 25%+.
AmFraser Securities Pte Ltd
Page 3
Yangzijiang Shipbuilding (Holdings) Ltd
YE 31 Dec INCOME STATEMENTS CNY'000 Shipbuilding Shipbreaking Investment Micro Finance Rigbuilding Revenue Cost of Sales Gross Profit Other Operating Income Administrative Expenses Other Gains/(Losses) Profit from Operations Goodwill writeoff Finance Costs Profit before Tax Income Tax Non-controlling interests PATMI
Thursday, 26 April 2012
2010A 12,363,404 540,151 19,253 12,922,808 (10,014,936) 2,907,872 969,533 (221,351) 3,656,054 (25,103) 3,629,407 (677,151) 3,084 2,955,340
2011A 14,608,898 916,878 180,053 15,705,828 (10,843,133) 4,862,695 150,067 (394,544) 452,044 5,070,262 (124,668) 4,998,481 (988,089) (33,793) 3,976,599
2012F 16,946,322 990,000 1,100,254 195,716 19,232,291 (13,817,795) 5,414,497 541,548 (468,041) 5,488,004 (255,528) 5,232,476 (994,170) (35,483) 4,202,823
2013F 19,318,807 1,650,000 990,228 293,574 315,000 22,567,609 (16,832,063) 5,735,546 595,703 (562,082) 5,769,167 (255,528) 5,513,639 (1,047,591) (37,257) 4,428,791
2014F 22,216,628 1,800,000 891,205 381,646 630,000 25,919,479 (19,967,214) 5,952,266 655,273 (653,323) 5,954,215 (255,528) 5,698,687 (1,082,751) (39,120) 4,576,817
EBITDA Free Cash Flow EPS (S cents) Book Value per Share (S cents)
3,816,158 3,497,174 15.36 50.51
5,346,915 (6,358,548) 19.94 68.84
5,890,984 2,493,431 21.09 84.43
6,252,147 1,868,185 22.23 100.66
6,517,195 3,911,205 22.97 117.13
BALANCE SHEETS CNY'000 Cash and cash equivalents Trade and other receivables Inventory Property, Plant, Equipment Other current assets Other longterm assets Total Assets
2010A 6,747,452 5,371,030 1,276,892 2,629,809 5,516,639 4,626,232 26,168,054
2011A 7,345,981 8,346,717 1,654,002 3,822,124 6,994,496 5,575,684 33,739,004
2012F 11,929,464 9,484,418 1,703,564 6,419,144 6,989,128 5,073,736 41,599,454
2013F 13,602,116 11,129,232 2,075,186 7,936,164 5,989,128 5,050,587 45,782,413
2014F 17,218,160 12,782,209 2,461,711 7,573,184 4,989,128 5,027,463 50,051,855
Trade Payables Borrowings: Current Borrowings: Non-Current Other Current Liabilities Other Longterm Liabilities Share Capital Other Equity Total Liabilities and Equity
3,627,812 906,450 320,309 10,806,777 428,229 6,262,406 3,816,071 26,168,054
3,499,872 6,044,001 2,446,828 7,515,114 516,533 6,242,037 7,474,619 33,739,004
4,353,552 7,319,675 3,722,502 8,813,114 567,038 6,242,037 10,581,536 41,599,454
5,303,253 7,319,675 3,722,502 8,813,114 567,038 6,242,037 13,814,794 45,782,413
6,291,040 7,319,675 3,722,502 8,813,114 567,038 6,242,037 17,096,450 50,051,856
AmFraser Securities Pte Ltd
Page 4
Yangzijiang Shipbuilding (Holdings) Ltd
CASHFLOW STATEMENTS Profit before tax Depreciation Change in working capital Other cash from operations (Interest paid) (Income tax paid) Net Cash from Operations (Purchase)/Disposal of PPE Other CFI (Dividends paid) Debt raised / (repaid) Equity Raised / (Bought Back) Other Cash from Financing
Thursday, 26 April 2012
2010A 3,629,407 161,648 1,015,311 (718,473) (20,910) (410,965) 3,656,018
2011A 4,998,481 223,766 (10,684,998) 580,537 (137,631) (853,530) (5,873,375)
2012F 5,232,476 402,980 964,417 143,256 (255,528) (994,170) 5,493,431
2013F 5,513,639 482,980 (1,066,735) 241,421 (255,528) (1,047,591) 3,868,185
2014F 5,698,687 562,980 (1,051,715) 239,532 (255,528) (1,082,751) 4,111,205
(158,844) (3,686,341)
(485,173) (837,105)
(3,000,000) 36,007
(2,000,000) 1,000,000
(200,000) 1,000,000
(618,238) 108,682 1,283,006 151,800
(909,992) 6,442,852 (20,369) 292,489
(1,095,906) 1,275,674 -
(1,195,533) -
(1,295,161) -
Beginning Cash 3,806,955 4,543,038 3,152,365 5,861,571 7,534,223 Foreign Exchange Effect 0 End Cash 4,543,038 3,152,365 5,861,571 7,534,223 11,150,267 *Ending cash differs from balance sheet cash due to fixed deposits, overdrafts, restricted balances and other items
KEY RATIOS Profitability (%) Gross Margin EBITDA Margin Net Margin ROE ROA ROIC
2010A
2011A
2012F
2013F
2014F
22.5 29.5 22.9 29.3 11.3 39.7
31.0 34.0 25.3 29.0 11.8 27.9
28.2 30.6 21.9 25.0 10.1 25.7
25.4 27.7 19.6 22.1 9.7 27.0
23.0 25.1 17.7 19.6 9.1 27.9
21.6 42.3 42.4 29.1
21.5 40.1 37.7 34.6
22.5 10.2 4.7 5.7
17.3 6.1 5.4 5.4
14.9 4.2 3.4 3.3
Financial Structure (%) Networth Ratio Debt/Equity Net Gearing
38.5 12.2 (54.8)
40.7 61.9 8.3
40.4 65.6 (5.3)
43.8 55.1 (12.8)
46.6 47.3 (26.5)
Operational Efficiency Days Sales in Receivables Days in Inventory Days in Payables Cash Conversion Cycle (days) Asset Turnover (x)
150.7 38.5 91.6 97.6 0.5
159.4 49.3 120.0 88.8 0.5
180.0 45.0 115.0 110.0 0.5
180.0 45.0 115.0 110.0 0.5
180.0 45.0 115.0 110.0 0.5
8.1 2.4 1.9 6.8 4.8
6.0 1.7 1.5 (3.8) 4.7
5.7 1.4 1.2 9.6 3.9
5.4 1.2 1.1 12.8 3.4
5.2 1.0 0.9 6.1 2.7
Growth (% Y-o-Y) Revenue EBITDA Pre-Tax Income Net Income
Market Valuation (x) Price / Earnings Price / Book Price / Sales Price / Free Cash Flow EV / EBITDA
AmFraser Securities Pte Ltd
Page 5
Yangzijiang Shipbuilding (Holdings) Ltd
Thursday, 26 April 2012
AmFraser Research recommendations are based on a Total Return rating system, defined as follows: BUY: >15% total return over the next 12 months HOLD: -15% to +15% total return over the next 12 months SELL:
